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Google’s construction site on future San Jose megacampus sits idle as company halts development amid cost-cutting.

Jennifer Elias

In June 2021, Google won approval to build an 80-acre campus, spanning 7.3 million square feet of office space, in San Jose, California, the third-largest city in the country’s most populous state. The estimated economic impact: $19 billion.

The timing couldn’t have been worse.

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A decadelong bull market in technology had just about run its course, and the following year would mark the worst for tech stocks since the 2008 financial crisis. Rising interest rates and recessionary concerns led advertisers to reel in spending, shrinking Google’s growth and, for the first time in the company’s history, forcing management to implement dramatic cost cuts.

The city of San Jose may now be paying the price. What was poised to be a mega-campus called “Downtown West,” with thousands of new housing units and 15 acres of public parks, is largely a demolition zone at risk of becoming a long-term eyesore and economic zero. CNBC has learned that, as part of Google’s downsizing that went into effect early this year, the company has gutted its development team for the San Jose campus.

The construction project, which was supposed to break ground before the end of 2023, has been put on pause, and no plan to restart construction has been communicated to contractors, according to people familiar with the matter who asked not to be named due to non-disclosure agreements. While sources are optimistic that a campus will be built at some point and said Google representatives have expressed a commitment to it, they’re concerned the project may not reach the scale promised in the original master plan.

The Mercury News, one of Silicon Valley’s main newspapers, previously reported that Google was reassessing its timeline. Sources told CNBC that the company started signaling to contractors late last year that the project could face delays and changes.

In February, LendLease, the lead developer for the project, laid off 67 employees, including several community engagement managers, according to filings viewed by CNBC. Senior development managers, a head of business operations and other executives were among those let go.

Last month, Google also removed construction updates from its website for the project, according to internal correspondence viewed by CNBC.

A LendLease spokesperson said in an emailed statement that the company remains “committed in the creation of thriving mixed-use communities in the Bay Area, including the Google developments,” and still has a “significant team to aid in delivering these communities.”

Alphabet-owned Google is embarking on its most severe cost cuts in its almost two decades on the public market. The company said in January that it was eliminating 12,000 jobs, representing about 6% of its workforce, to reckon with slowing sales growth after head count swelled before and during the Covid pandemic.

About a year ago, Google announced that it would invest nearly $10 billion in at least 20 key real estate projects in 2022. By then, the company had already completed much of its multiyear land grab of downtown San Jose for the future campus.

Money coming ‘when the cranes are in the air’

Things changed in a hurry. On Alphabet’s fourth-quarter earnings call, in February, finance chief Ruth Porat said the company expected to incur costs of about $500 million in the first quarter to reduce global office space, and she warned that other real estate charges were possible in the future.

While the tech industry broadly is struggling to adapt to a post-Covid world that appears to be more hybrid and less centered around large campuses, Google is in a particularly precarious spot because of its massive commitment, financial and otherwise, to altering the landscape of a major urban area.

“We’re working to ensure our real estate investments match the future needs of our hybrid workforce, our business and our communities,” a Google spokesperson said in an emailed statement. “While we’re assessing how to best move forward with Downtown West, we’re still committed to San Jose for the long term and believe in the importance of the development.”

Google spent several years planning for the San Jose complex and invested significant resources in winning over the local community. Opposition in some corners was so fierce that, in 2019, activists chained themselves to chairs inside San Jose’s City Hall over the decision to sell public land to Google. A multiyear effort to address community concerns ended with support from some of the project’s stiffest early opponents.

To win over the community, Google designated more than half its campus to public use and offered up a $200 million community benefits package that included displacement funds, job placement training, and power for community leaders to influence how that money would be spent.

While some community benefits have already been delivered, the bulk is to be given out upon the development of the office space. Google also promised to build 15,000 residential units in Silicon Valley, with 25% of them considered “affordable,” a critical issue in an area with one of the highest homeless populations in the country, according to government statistics. Some 4,000 of those housing units were set to be built at Downtown West.

“We all originally knew that it’s going to be a long-term plan,” San Jose councilmember Omar Torres, who represents the downtown area, told San Jose Spotlight in February. “But yes, it’s definitely concerning that a lot of the money is coming when the cranes are in the air.”

Google’s construction site sits idle on a Tuesday afternoon.

Jennifer Elias

The demolition phase of the project took out a number of historic San Jose landmarks and forced the relocation of others. A 74-year-old dancing pig sign for Stephen’s Meat Products had to be moved, and only a small part of an old bakery building remains.

Patty’s Inn, an 88-year-old beloved pub, didn’t survive the teardown.

“This is a dive bar, but I never thought of it as a dive bar. It was just Patty’s Inn,” Jim Nielsen, an executive at RBC Wealth Management and longtime patron of the bar, told the Mercury News at the time. “It’s tough to see these places go away because they can’t be replaced.“

The new campus was expected to bring some 20,000 jobs to the city.

Empty swaths of land

CNBC visited the site a couple of times in April during the normal workday, to see swaths of land where old buildings have been replaced by cranes, tractors and other construction equipment in a fenced-off area. Nobody was working on site.

Construction projects of this scale take a long time. Google had originally said it would likely need between 10 and 30 years to build out the campus, so it still has a significant cushion to resume development.

LendLease said in 2019 that it struck a $15 billion deal with Google to spend the next 10 to 15 years redeveloping the company’s landholdings in San Jose as well as nearby Sunnyvale and Mountain View, where Google is headquartered.

“LendLease will play a key role in helping deliver at least 15,000 new homes on our land,” David Radcliffe, Google’s real estate lead at the time, said in a press release.

But Radcliffe left Google in late 2022 after 16 years at the company. He was replaced by Scott Foster, who previously led global real estate for financial firm RBC. Sources familiar with Google’s real estate projects described Foster as someone who is expected to be more conservative in spending and more likely to slim down the scale of the campus, especially amid cost-cutting efforts.

With construction at the site currently stalled, San Jose sits without an expected anchor tenant in an empty swath of its downtown. Dozens of vendors and contractors that were expecting work are focusing on other projects as they wait to hear what happens next.

The mood is vastly different from what it was less than two years ago, when Gov. Gavin Newsom stood beside Google Senior Vice President Kent Walker at an event in San Jose, ahead of a city council meeting that would determine whether the project got approved. Newsom used the occasion to sign SB 7, a bill to speed up construction of housing and development projects.

Newsom and officials cited Google’s proposed mega-campus several times as an example of the state’s economic “comeback” from the Covid pandemic.

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Google has been gobbling up bigger and bigger patches of Silicon Valley for as long as we’ve reported on the company, but it may be pulling back from its biggest development yet — after razing small parts of San Jose to the ground.

CNBC reports that following the first demolition phase, Google has halted construction on its “Downtown West” campus, which was slated to turn 80 acres of downtown San Jose, California into 7.3 million square feet of offices, 4,000 housing units, 50,000 square feet of retail and cultural space, and 15 acres of parks. The city believed the project could reach a value of $19 billion and offer 20,000 jobs after more than a decade of work.

Google isn’t denying the report, with spokesperson Bailey Tomson providing this statement to The Verge:

As we’ve stated, we’re working to ensure our real estate investments match the future needs of our hybrid workforce, our business and our communities. While we’re assessing how to best move forward with Downtown West, we’re still committed to San José for the long term and believe in the importance of the development.

While that statement could mean anything from “we’ve had a minor pause” to “we’re not interested in doing it anymore,” Tomson also pointed us to this San Jose Mercury News story which suggests that Google is merely changing the timeline, and where quoted business leaders and development directors seem hopeful that it’s merely a pause.

CNBC seems a little less hopeful, pointing out that Google is currently trying to reduce its office space rather than growing it, to the point it’ll incur costs of half a billion dollars this quarter. The company cut 12,000 jobs in January. Google’s chief contractor also appears to be out of work for an indefinite period: it has laid off over 60 employees, with sources informing the publication they haven’t been told when construction might continue.

“While sources are optimistic that a campus will be built at some point and said Google representatives have expressed a commitment to it, they’re concerned the project may not reach the scale promised in the original master plan,” CNBC writes.

San Jose Mayor Matt Mahan downplayed the CNBC story to local reporters today, saying he’d just gotten off a call with Google to confirm nothing had changed beyond reassessing the timeline for construction, according to a video recording provided by his office to The Verge. He did not, however, say anything about how long the reassessment might take or when Google might resume.

“That, as far as we understand, is still their commitment”

“Google remains fully committed to San Jose in the long term, and San Jose is fully committed to Google,” said Mahan. “Google has a 30-year development agreement on its 80 acres around Diridon Station, and they have a lot of flexibility built into that plan.” Later in the briefing, he added that the project was always designed to go faster or slower depending on Google’s hiring needs, and that the City of San Jose can’t dictate when a property owner builds new office space.

“Over time, as the economy expands and Google’s growing again and they’re hiring again, you’re going to see them move forward Downtown West, I think, and as that, as far as we understand, is still their commitment,” he said.

San Jose economic development director Nanci Kline confirmed the halt to construction to The Silicon Valley Business Journal, but said that out of the layoffs at Google contractor Lendlease, only one person was cut from the Google Downtown West team.

The San Jose campus was controversial from the start and even spurred protests: Google spent four years convincing the city, making numerous concessions and pitching the whole campus like a new neighborhood, before the project was approved in 2021.

Update, 10:44PM ET: Added comments from San Jose Mayor Matt Mahan and San Jose business development director Nanci Kline.

There’ll be music filling St. James Park for the next five Sundays, and the organizers behind the Levitt Pavilion Spring Concert Series are hoping that it’s just a sign of what’s to come.

Following a successful first edition last fall, the free series kicks off May 21 with trumpet sensation Maurice “Mobetta” Brown, whose music glides between jazz, blues rock and hip hop. The headliners for future shows are Chicano soul group Los Yesterdays (May 28), bluesman J.C. Smith (June 4, with another local favorite, Noah and the Arkiteks opening), an East San Jose album release party and cumbia dance party (June 11) and the Los Angeles all-female rock band La Luz (June 18).

The shows all start with openers at 3:30 p.m. and run until 7 p.m., with audiences invited to bring a blanket or lawn chair to enjoy the music. There’ll be a beer and wine garden — featuring Coterie Winery and local breweries — as well as food trucks, including Cali Cool Shave Ice for this Sunday’s kickoff.

The Friends of Levitt Pavilion San Jose put together the series to give people an idea of what having a permanent Levitt Pavilion stage in the park could be like, providing at least 50 free concerts for the community every year. You can check out their plans, and get updates on future concerts, at www.levittsanjose.org.

MACLA AUCTION ENCORE: Yosimar Reyes is best known as a poet, but he made quite an impression as an auctioneer at last year’s Latino Art Now! auction for MACLA, the Latino arts gallery in downtown San Jose’s SoFA District. He’ll be back for this Saturday’s auction, which again will take place outdoors at Parque de los Pobladores, across the street from MACLA’s home at 510 S. First St.

There are dozens of pieces for auction by artists including Pilar Agüero-Esparza, Francisco Ramirez, Elizabeth Jiménez Montelongo, Aaron De La Cruz and Jet Martinez. The festivities start with a 6 p.m. reception, followed by the auction at 7 p.m. Tickets are $100 online (advance sales end 3 p.m. May 19) and $125 at the door. And if you want to check out the art exhibition, it’s open noon to 7 p.m. Friday and noon to 5 p.m. Saturday. Go to www.maclaarte.org for details.

MAYORAL CYCLING: San Jose Mayor Matt Mahan participated in “Bike to Wherever Day” on Thursday, stopping by an energizer station at the Dr. Martin Luther King Jr. Library in downtown San Jose, not far from City Hall. Mahan conceded that he didn’t ride his bike all the way from his Almaden Valley home — dropping off two kids at preschool made that difficult — but said he’s done it before and spoke about the various trails and connections he would take.

Mahan says he didn’t own a car for 15 years while he lived in denser cities like Boston, Washington, D.C., and San Francisco. That changed, however, when he moved to San Jose. “But we’re making progress,” he said, noting that the city continues to add bike infrastructure including protected bike lanes.

MORE MUSICAL NOTES: When New Ballet San Jose’s dancers take the stage at the Hammer Theatre Center this weekend for its production of “Sleeping Beauty,” they’ll be accompanied by a live orchestra conducted by Thomas Shoebotham performing the famous Tchaikovsky score. Shoebotham and Mimi Carlson — an Opera San Jose trustee and retired flutist with Symphony San Jose — led a successful fundraising initiative to bring live music to the show.

A round of applause is due to the leading donors, Charles F. Hanes, Mimi Carlson and Eric Carlson, John Heineke and Catherine Montfort, and Gareth Hughes and Dalia Rawson (who had a vested interest in the outcome as New Ballet’s founder and executive director). Tickets to the 2 p.m. performances on May 20-21 are available at www.hammertheatre.com.

And San Jose Wind Symphony continues its “Passing the Baton” season this weekend, providing another “live tryout” to a potential successor to longtime conductor Edward C. Harris. The guest conductor on May 21 is Danielle Gaudry, director of bands and coordinator of instrumental music at Cal State-East Bay. The concert, “Music and Muses,” will showcase music inspired by other art forms like poetry and theatre to conga dancing. Tickets to the 3 p.m. concert at the McAfee Center in Saratoga are available at www.sjws.org.

Imagine waking up at the crack of dawn, just to get your hands on the freshest, most authentic Portuguese pastries in town. That's the scene at Pastelaria Adega, a downtown San Jose bakery that has made a name for itself thanks to its incredibly scrumptious offerings and its impressive pedigree as a sister bakery to the Michelin-starred restaurant Adega. People are raving about this hidden gem that has transformed the area, and you need to know why.

Founded by Adega restaurant owners Carlos and Fernanda Carreira, Pastelaria Adega has quickly gained a following since its opening in November 2019, as reported by Mercury News. Originally known for their hugely popular pop-up events, where they sold out 1,000 egg tarts within the first hour, Pastelaria Adega serves up a mouthwatering variety of sweet and savory pastries, including their famous pastéis de nata.

It's this Portuguese custard tart (Pastel de Nata) that has sent the crowds into a frenzy. The bakery's head baker, Jessica Carreira, who's also the daughter of the owners, traveled to their family's hometown in Portugal to learn how to make these authentic pastries. The result? A pastry so perfect that San Jose residents can't get enough, with TikTok user sanjosefoos gushing over the amazing crunch and texture of the pastry, rating its deliciousness a whopping "20 out of 10."

@Pastelaria Adega is the SPOT - Downtown San Jose has this hidden gem an ...See more

Credit must be given to the Carreiras for their tenacity and determination to bring authentic Portuguese cuisine to the city. Beyond the jaw-dropping pastries, Pastelaria Adega is also making a difference in its choice of location. According to Mercury News, the bakery finds itself on East Santa Clara Street, a part of downtown that has faced its fair share of challenges. But just as they did with their restaurant, the Carreiras are choosing to invest in an area that they believe can benefit from their culinary expertise. Developer Gary Dillabough, who owns Pastelaria Adega's building, praised the Carreiras for their spirit and enthusiasm, noting that businesses such as these help change cities for the better.

And it's not just the locals who are noticing the difference. Thanks to its uncompromising commitment to quality and authenticity, Pastelaria Adega has earned recognition from publications such as Eater San Francisco, who mentioned the bakery's head baker, Jessica Carreira, lauding the quality of the pastries' laminated dough and the thick, luscious custard filling. It's clear that the team behind Pastelaria Adega is intent on elevating the experience, not just selling pastries.

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With a dedicated and passionate team behind it and a growing legion of fans eager to savor its sensational pastries, Pastelaria Adega seems poised to thrive in San Jose. Whether you're a downtown resident or planning a trip to the city, one thing's for sure: a visit to this bakery is an absolute must. You might need to set your alarm early, but judging by the rave reviews and undeniable success, it's a small price to pay for a bite of true culinary bliss.

The conference finals are almost underway, and sadly for San Jose Sharks fans, their team did not come close to reaching that round this season. Instead, the Sharks missed the playoffs for the fourth consecutive season and are still a few years away from contending for their sixth Western Conference Final appearance. But, even though they are not participating in the postseason, Sharks fans still can take a rooting interest. Specifically, they should want the Dallas Stars and Carolina Hurricanes to meet in the Stanley Cup Final. This matchup would be a positive for the Sharks, in terms of both the current and long-term outlooks for the franchise.

Brent Burns or Joe Pavelski Would Win First Cup

A few former Sharks are still alive in the playoffs, including Brent Burns of the Hurricanes and Joe Pavelski of the Stars. Both veterans spent most of their careers in San Jose and were invaluable contributors to numerous postseason runs. They were also fan favorites: Burns the wild, bearded provider of energy and physicality; Pavelski the smart, steady team leader and captain.

They have both built remarkable careers by playing the game the right way. While it’s difficult to say that any player deserves a championship, they both come very close. Sharks fans should always be grateful to have had them and that they were at the center of so much success during their time in the Bay Area. It would be great for either one of them to be rewarded with the Cup, even if it isn’t with the Sharks.

Sharks Fans Can’t Root for Golden Knights

The Eastern Conference Final features the Hurricanes and Florida Panthers, neither of whom have a rivalry with the Sharks. The Western Conference Final is a different story, as the Stars will take on the Vegas Golden Knights for a chance at the Cup Final.

Related: 3 Teams for Sharks Fans to Cheer for in the 2023 Playoffs

As strange as it might seem, San Jose’s rivalry with Vegas peaked only four years ago. The teams jabbed at each other physically and verbally, culminating in the Sharks’ incredible first-round comeback in Game 7 of the 2019 Playoffs. Even though the Sharks aren’t necessarily one of the NHL’s premier franchises, and the Golden Knights were in just their second season of existence, it was the league’s most intense rivalry at the time.

Given that so much has changed in the NHL and the world since then, the feud may feel like the distant past. But San Jose fans should remember that rivalry when deciding who to root for. The teams have gone in different directions since 2019, and the Golden Knights now have a former Sharks goalie in Adin Hill, who has become their unlikely backstop this postseason, but even during a time of struggle, the Sharks need to maintain some rivals, and the Golden Knights are still one of them. Rooting against your rivals means rooting for their opponents, leaving Sharks fans with no choice but to support the Stars.

No New Cup-Winning Franchises

Despite many years of regular-season success, the Sharks have not won the Stanley Cup in their 32-year history. They are one of 12 active NHL franchises without their name on the trophy, but two of them – the Knights and Panthers — are still alive in this year’s playoffs.

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The Sharks do not want to be the last NHL team without a title, and they certainly don’t want any franchise younger than them, including Vegas and Florida, to reach the summit before they do. They don’t want the embarrassing distinction of being the final team without a championship. Doing so, particularly when several other franchises have shorter existences, would be difficult for fans to stomach. It would also further establish the Sharks as a franchise that always comes up frustratingly short in the playoffs.

On the flip side, Dallas and Carolina already have one Cup each. A championship for either of them would keep the Sharks in the company of 11 other franchises for at least one more season. That kind of legacy is one of several reasons that San Jose fans should want those two teams to face off for hockey’s ultimate prize. If the Hurricanes-Stars showdown comes to fruition, it’ll have a positive impact on the Sharks’ recent history and their future outlook.